Long-term unemployment

There's more than enough bad news to go around these days, but this graph is among the most quietly scary things to contemplate. It's from the Wall Street Journal, and it charts the historical percentage of the unemployed who've been without a job for 27 weeks or more. As you can see, for most of the past 50 years, the long-term unemployed made up relatively little of the total unemployed. The only time the percentage tipped over 25 percent was in the early-'80s, and even then, it was only for a moment.

Now the long-term unemployed make up more than 45 percent of the total unemployed population. That's seriously worrisome. And, frankly, a little weird. As you can see in this next graph, the total rate of unemployment is not that much higher now than it's been at other points in our recent history:

Unemployment isn't just a problem because it means someone loses his job. It's a problem because it means that person's next job is likely to be worse than his last one. People lose their skills, their contacts, their self-confidence. Their résumé begins to look worse and, if they're older, age discrimination kicks in. This unemployed correspondent of Andrew Sullivan's explains it eloquently:

Several things I've learned: You can't apply for jobs well under what your previous job was; you won't be taken seriously and will be considered over-qualifed. You must fall completely to the bottom and get the occasional minimum wage, temporary job. No one will commit to any training for a new position. If you've done exactly the job advertised before, you'll be considered. But you'll be considered incapable of learning anything new. General experience will not be considered. Stuff learned on your own will be denigrated or discounted. University degree qualification doesn't matter. Age discrimination is alive and well.

Unemployment, in other words, lasts. It affects re-employment. And the longer you're unemployed, the worse your next job is likely to be. So the spike in the number of long-term unemployed is the sort of thing that we need to worry about even as we move into recovery, because it implies that recovery, for a lot of people, will not be the return to normalcy that they'd hoped.

As an older worker who has been RIFed twice in the last 7 years, I concur.
It is interesting to me that the magical invisible hand of the Free Market does not yet realize there is a HUGE pool of good experienced, talented, older workers who would work for less money, but decent health insurance (because they could not purchase it at ANY price).
If I owned a company, these are the people I would target as potential employees.

This post reminded me of an interesting perspective on the topic a while back:

http://esr.ibiblio.org/?p=1752#more-1752

I think there's a lot of truth to that. Regulation is a really bad thing for the long-term unemployed. As grat_is noted above, a lot of people out there would be will to work for less money, but regulation prohibits wages from falling.

Ideally, I believe government policy should lean towards leaving the private sector alone and providing a strong safety net.

The quote about what happens to older workers falling all the way to the bottom is right on target, and this reality creates special problems for those in middle age that are finishing raising a family and hoping to finally start giving first priority to accumulating retirement savings.

The day might come when workers over 50 will need some equivalent of "affirmative action," because a great deal of talent and experience is being wasted.

Of course LT unemployment is highest ever, that is because unemployment benefits are the longest ever. For many people, it makes more sense to stay on unemployment than getting a lower paying job. The longest benefit is now 104 weeks I think, if you have them that long, the long-term unemployment is going to stay up.

Unfortunately, a lot of the job growth in the past decade was either directly or indirectly related to the real estate bubble / credit bubble. These were jobs in residential construction, mortgage processing, real estate brokers, and Wall Street jobs. As these sectors contract, there will be a lot less seats to go around, and those people will be forced into new industries.

1) the trend line looks generally 'up' to me, which reinforces the scariness of the data.

2) this really shouldn't be a surprise. The economy over the last 20 years has been funded increasingly through borrowing - not only federally, but at the consumer level as well. As that borrowing diminishes, we should not expect a rapid recovery to pre-crash levels of employment. Really, it's unreasonable to expect anything different until 1) our economy is based on sustainable consumer spending habits and 2) we create jobs based on adding real value / creating real products.

To put it differently, an economy fueled by a real-estate bubble is as unsustainable as an economy fueled by an internet bubble. Until we structure our economy for sustainability, the long-term unemployment rates will not come down.

visionbrkr:
What I notice in my current company is that they pay a lower salary, but have a very high rate of turnover. I do not know what recruitment costs are, but in generic studies I see they can run $10K and more per position. I might think that older employees are more stable, less likely to move. I also like to imagine that older workers are more immune to the various insanities of middle management that causes younger ones to move. I also realize that pay and benefits come out of a different money bucket than recruiting and often management does not care to address this.

Such attitudes might also address productivity differences between older and younger workers, but I do not have numbers on this.

I did not mean affirmative action in any sort of formal sense. What I intended to convey is that it would be both beneficial to most employers, and useful for the society as a whole, for us to get over the idea that a person who is "over-qualified" should be passed over in favor of someone who is merely "qualified" (and younger). If you are in charge of a sports franchise, you welcome the ability to get a veteran athlete that has a more stellar record than the average player, and whose skills are still there, and employers should too.

Of course I agree that people should save for retirement before middle age (duh), but putting away a lot of the paycheck can be easier said than done with the drastic inflation in the costs of health care, housing, sending kids to college, etc. Plus in the past few years, many with retirement accounts saw the value of the equity of the securities in those accounts take a big hit. So for many, the time when the kids are gone becomes a critical period of significantly finishing the building of the nest egg.

Perhaps you would like to clean a toilet or do some filing while I take your position? I have worked in this country for over 30 years, paid my way, paid the way for others through donations and taxes, and never collected a drop of unemployment.

It doesn't matter specifically who I am; I could be your father or your mother who you choose to throw to the bottom of the heap like garbage after we have paid your way through life and school.

We are talented beyond belief and have a lot to give to this country still.

The only thing we have not done good enough was to teach kids like you to respect age and experience.

The time is now for affirmative action for older people; I think over 40 should do it.

There were once people who thought that "doesn't fit our needs" was a good enough reason to discriminate and that was changed.

Fortunately for older workers, the vast proportion of the job market is already controlled by older workers... if by older you mean the 'over 40' crowd. If there's age discrimination going on, it's a Baby Boomer on Baby Boomer issue, not something the younger generations are 'doing' to their elders.

In regards to the generational aspect, I think the older generations would be a lot more respected if they maintained the committment to education and social promotion that they received themselves. The older generations don't want to pay the taxes to support education anywhere commensurate with their own experience, so the tuition and debt load of college grads has spiked. Along with the higher-ed cost increases, the vocational training and apprenticeships that used to be offered for the non-college bound have been cut out from high school and most of the trades since unions have been gutted.

Like you, I've been working for almost 30 years, paid my way through college without loans (e.g. working), and have never collected unemployment. I'm also still under 40. Things suck for everyone right now and trying to float your own boat by sinking someone elses has been a proven failure since Reagan was in office.

Oh, Ezra, I noticed the trough in your trend line for 2005-2008 was still higher than all but a few spikes, so the economy was already prepped for this peak in long-term unemployment.

I figured you knew all about CI but some others may not. I also get that its tough (especially nowadays) to put money away but people still should (even if its $10-$20 a week) because if you're young that goes a long way. Dollar cost averaging also helps with the retirement accounts that have taken a hit lately (unless you're one that's very close to retirement but then you shouldn't be in equities at that point anyway).

I agree that over-qualified is wrong and the best person should be hired regardless of anything including being over-qualified.

grat-is,

I agree that older employees are more stable but they may also have other negative issues too. Need more time off at the last minute for family issues etc. Not that that's a bad thing but something employers look at. Also if you've got a smaller employer most states healthcare rates are factored on age bands at the very least and adding older employees can drastically increase not only their rates but the rates for the entire company. This shouldn't but does come into play. Sure there are positives like you mention but there are negatives too and I guess it depends on the industry to determine if recruitment costs are worth it if you have a high turnover because of younger workers.

Perhaps the high rate of long-term unemployed has SOMETHING to do with the fact that those unemployment checks just keep coming -- month after month. Not much incentive to go find a job any more, certainly not one that pays at or near minimum wage.

We are creating a class of folks accustomed to living ENTIRELY on government handouts. Bad news for the rest of us!

Those child labor laws don't often apply in many of the manual industries, like farming and logging. You also don't have the sophistication in the application of labor laws for the class of employees who work in those industries... when you're at the bottom of the economic food chain, any income is good income regardless of age.

I just think all the talk about age discrimination and jostling for small bits of the pie misses the point that we're in an unprecedented recession in modern society. Our energies should be focused more on floating all boats.

We have a reliable social safety net. It may not make being unemployed for the long term more attractive, but it certainly makes it more possible. The nature of benefits (better when unemployed, or with no reported income) might make participating in the cash-only economy more attractive (thus those people would be counted as unemployed, but in fact be working at something).

And I believe the current extension of unemployment benefits is unprecedented (I may be mistaken on that), but I would assume that is a factor as well. If you can collect your unemployment while searching for a high quality job, or get a low quality job that barely pays more than your unemployment, which would you do?

If they stopped extending unemployment benefits, you'd probably see the long-term unemployed getting more (unattractive) jobs.

I agree that we should have employment policies aimed at lifting all boats, and my argument is simply against denying opportunities to older workers on the grounds that they are "too qualified."

visionbrkr, I can't agree that older workers tend to request time off at the last minute, etc. I think that overall the work ethic and habits of mature employees are very high, and compare extremely favorably to younger first-time employees. If there is any data to the contrary, I'd be interested in seeing it.

What I have observed is that the so-called over-qualified person may not get hired because they are seen as threatening...the stereotype that because of their experience they will behave as "know-it-all's" (implying that the young will be more compliant), or that because of their age they will not bond with the culture of the younger people on the team. People tend to use unspoken generalized myths like these to excuse their refusal to hire the best-qualified applicant, if that person is in middle age.

Again, I think the quote in Ezra's post is very true, that older laid-off workers quickly fall to the very bottom in the work force. I think there needs to better awareness about that dynamic, both because it is unfair, and because valuable skills built through long experience are being wasted as a result.

Hopefully all the unempathetic employed will never be in the position of being successful through their forties and then find themselves unemployed for a length of time that they would never have ever dreamed of....

where they send out THOUSANDS of resumes...

get a few rejections back...

get phone interviews but when in person interviews are won the young interviewer makes off hand remarks about their age...

and as there is a limit to unemployment they worry with each passing week....

By the way....your friends might all have jobs because unemployment in the DC area is 5.9% It is much higher in other areas of the country where more and more of the lazy unemployed go homeless everyday....even those who have degrees.....

generalities in any situation are wrong. My statement that older workers MAY request to take time off at the last minute is more a factor of them having families that require more care (one of my employees is like that and she gets more time off than anyone and i give her more lee-way than anyone else here but its because she's very good at what she does. If she wasn't maybe i wouldn't give her as much leeway. Do other employees get upset at that, probably but that's tough.

I do have one younger employee that started out of college two years ago who is very very good at what he does. He works very hard and is very good at what he does.

Again generalities are bad. that's my main point. Oh and also that AA is bad too. The best workers should (IMO) be hired with no outside, undue influence.

According to the Washington Post on July 3, 2009: The nation now has the same number of jobs it did in 2000, meaning that nine years of employment gains have disappeared. According to the Bureau of Labor Statistics, the net jobs lost since December, 2007 is nearly 7.8 million with 4.7 million jobs lost in 2009 alone.

Since 2000, we have added over 10 million legal immigrants and now tolerate more than 7 million illegal workers in non-farm jobs. According to DHS reports, less than 12% of legal immigrants initiate their own immigration. The vast majority are either brought in under family reunification, including extended family, or by employers. As most of these immigrants have no better skills than our own unemployed workers, why do you think the US continues to allow their entry with so many of our own workers unemployed?

The situation for older workers is a really awful one, and it's one of the number one reasons why I'm VERY grateful we passed the healthcare reform bill. My father was a small businessman until he got cancer in his 50's -- he has not been able to find stable long-term unemployment ever since. This left him with about a decade between losing work and starting Medicare coverage -- a decade of crushing annual premium hikes clearly designed to coerce him to drop his coverage.

It will be interesting to see how "Obamacare" impacts this population going forward. Hopefully leveling the playing field will mean more employers take chances on older workers.

Of course, as a younger person I'm not so happy about our employment situation either (especially given all the debt we have to take on for higher ed). But, honestly, I'm not facing horrible chronic disease or a risk of a scary relapse. Nor do I have a family depending on me. Most of us will make it through this fine. Many older people won't.

I couldn't BELIEVE your stupid, cruel comment. I'm on comment boards a LOT, and I've NEVER called another person's comment either "stupid" or "cruel," but then I've never seen one that deserved those descriptions -- until now.

I have friends who have toiled all their lives and never taken a CENT from ANYONE -- not the government, not charity, not handouts from friends and family. Yet now they're unemployed, some of them long-term unemployed, particularly older ones.

ARE there "lazy jerks" out there? Of course there are. But I seriously doubt that every single unemployed American -- or those in other countries, for that matter -- come anywhere NEAR being "lazy jerks."

Since I don't know you, I cannot honestly call you "lazy" or a jerk. I do know your COMMENT, and it certainly is what I would expect from a jerk.

Good article, Mr. Klein, if a deeply di for foreigners in various computer disciplines sturbing one.

Someone mentioned legal immigrants. In regard only to those coming on work visas, we have to consider the particular industry.

For instance, some years back I read about a group of IT companies who wrote Congress asking for an increase in the number of visas for foreigners in various computer science areas -- for the simple reason that there weren't enough qualified people in the entire country to coming anywhere *near* meeting demand. So, with no increase in visas, they would have to limit their plans for lack of personnel.

At the other extreme, I know someone who has a smallish commercial garden. One year she decided to try to help fellow Americans so offered well over double the then-minimum wage, a 40-hour week with overtime, free lunch, a furnished trailer house a few miles away with a $100 stiped (above and beyond salary) for utilities, etc., and even transportation between the mobile home and the farm. How many Americans or even legitimate green card holders applied? Zero. That's right, not a single one. And she advertised in the newspaper, on local radio, with handbills papering the county, and even by visiting local schools, targeting students between their junior and senior years.

The most common response she got was that no one wanted to work out in the sun picking vegetables, etc. -- not when they could get 40% as much money flipping burgers in an air-conditioned burger joint or the like.

Most of her crop rotted in the field that year. (Luckily, she had other sources of income, so wasn't destitute.)

We all have to guard against making hasty generalizations as they almost invariably turn out to be OVERgeneralizations -- and, therefore, invalid.

For instance, if I see a Black person stealing hub caps, I can't -- legitimately -- say, "All Blacks steal hub caps." Or I see some guy I know to be a member of a certain denomination stealing a car; I can't say "All [fill in the denomination or religion] are car thieves."

Those examples are stupidly simplistic, I know, but when we start talking about major issues involving numbers in the millions, we tend (including me) to seek clear answers in easy numbers. [We all know the terrible fight going on in Arizona, and about it, regarding its new law aimed at illegal immigrants, as one example. That is, Arizona indeed has a huge problem with illegals, and the vast majority are Mexican or Latino. But it also has a substantial *native* Latino population -- natural-born American citizens whose families have been here donkey years, plus legal Latino immigrants. Hence, the gloves are off. And no, I'm not taking sides here; this isn't the place for it. I'm only drawing a parallel with another, different, generalization that may or may not be a hasty one.)